Let’s face it, getting motivated to prepare for our financial future can be tough. And staying motivated is an additional challenge. There will always be something more fun to spend our money on than sticking it in a retirement account or saving for a rainy day.
So how do we stay motivated?
We must find a compelling reason to save and prepare for the future otherwise it’s less likely to happen. We need to have a big enough “why” behind saving and investing our money.
This really gets into a conversation about purpose:
- What are we here to accomplish?
- What drives us?
- What values do we hold dear?
This may seem a little “touchy feely,” but believe me when I say that it’s a critical exercise to go through early in the financial planning process.
If we can identify what’s important to us, we can gain better control over our finances.
There is another benefit to having this conversation: we may be able to sidestep some regrets later in life.
I remember a survey given to elderly people many years ago where they were asked a simple question. If allowed to live their lives over, what would they change? What would they have done differently?
Some said they would have taken more risks, others that they would have created things to survive beyond themselves. But the one answer that intrigued me most was that they would have spent more time “reflecting.”
This made me think. Reflect on what? In a word—purpose. In the end, we all want to believe our life mattered and we accomplished what we were supposed to.
The cycle that sidetracks us from purpose
There is a destructive cycle around money most people go through that tends to cause great pain and lead to financial problems. I’ll have to walk you through a little psychology review to make my point, so bear with me.
You may be familiar with Maslow’s hierarchy of needs. Maslow used the image of a pyramid to illustrate his “theory of human motivation” and how needs are prioritized.
At the bottom of the pyramid are basic needs like air, food, water, clothing, and shelter. The next layer contains those things that contribute to safety for ourselves and our family. Once those needs are met, we seek love and belonging, then self-esteem and confidence, and then at the top of the pyramid is self-actualization, or being all you can be.
Here’s where the destructive cycle comes in:
First: We identify a need—anything from a basic need, like water or clothing, to a more advanced need, like love.
Second: Our need changes to a want.
I need water, but I want bottled water. I need a car, but I want the latest model with all the bells and whistles. I need shelter, but I want a really nice house in a fine neighborhood. I need food, but it would be so much nicer if someone else would cook it and a waiter or waitress would bring it to me at my table.
Third: We obtain the things we want.
Fourth: We feel a sense of happiness in our achievement.
For a while, anyway, until we see that someone else has a nicer house or car, or eats at better restaurants, leading us to…
Fifth: We compare ourselves to what others have.
You get the picture. This cycle tends to repeat itself throughout the course of our lives. We all want to look successful so we put our best foot forward without necessarily thinking that we are creating jealousy among our peers.
No doubt you’ve seen this on social media. People tend to show only the great things happening in their lives and none of the bad. It makes their lives look idyllic. There is actually a name for it:
This cycle is hard to break because it is built into our DNA. But we can break the cycle if we get grounded in the conversation of purpose. So how do we do that?
Discovering your purpose
I like helping people discover purpose in a roundabout way, with four steps:
Step one: make a list of goals.
Think about your bucket list. What must happen for you to feel that you have lived a life without regret? These are the things you want to have, do, be, own, or accomplish.
This can be hard for people, but try your best to go as deep as you can. It will be worth it—you’ll see. Here are some things to contemplate:
Let’s say you found out you had a terminal disease and you wouldn’t live much longer than a year, but the disease wouldn’t hamper your ability to live a normal life over the next year. What would become a priority for you?
Here’s a list of possibilities to inspire your thinking:
- Places you have always wanted to visit
- Adventures you want to go on
- Activities you want to try
- Ways to spend more time with family and friends
- Something you want to learn
- A degree you want to pursue
- Somewhere you want to live or travel to
- A hobby you’ve been wanting to try
- A faith-inspired goal
- A charitable goal
- A business venture you dream of
- A book you want to write
- A legacy you want to leave
Put “bucket list goals” in a search engine and you may find some things that stir your imagination.
Actually write out your list of goals! Have some fun with it and don’t restrict yourself. Write as many goals as you can without any thought to whether you can achieve them or not.
Step two: decide on the most important goals.
On a separate piece of paper, write the most important goals on your list, leaving a space next to each one.
This is not necessarily a list of the most realistic goals, but a list of the most important goals. Put down the three to five goals that are the core to who you are and what you want to achieve.
Step three: discover the values that underlie each goal.
In the space you left next to your most important goals, write a word that signifies why that goal is important to you. What is the value attached to it?
Examples of value words include: love, beauty, peace, adventure, accomplishment, thrift, courage, freedom, faith, honor, education, benevolence, appreciation, creativity, duty, enlightenment, exploration, justice, generosity, humor, joy, kindness, family, leadership, truth, virtue, thankfulness, sacrifice, responsibility….
Again, this is something you can do a search for if the above list doesn’t contain a word that inspires you.
Let’s look at an example of how a single goal might have different values attached to it. Let’s say you want a home on a beach somewhere. Many people might hold that same goal, but there may be very different values that underlie the goal. One person may want it because they value the beauty of the waterfront, another because it would be a place to gather family, and another because it provides them an inspiring getaway for writing and creativity.
The goal is the same for each person, but the values may be very different.
Step four: choose the most important value to you.
Once you have a value word that really speaks to you, circle it. Say it out loud. Does it really describe who you are? Does it excite you? If so, that’s your word.
Now we’ll put it in a sentence for your money purpose. “The purpose of my money is .”
Insert your most important value into that blank. If “love” is your word, you might write, “My purpose for money is expressing and sharing love.” If the word is generosity, then you might write, “My purpose for money is showing generosity.” Freedom? “My purpose for money is creating freedom.”
Get the point?
This isn’t just what you want for yourself. This is what you want for everybody in your life. It can be contagious once it gets ahold of you. If freedom is important for you, then you’ll want to spread it around.
Would you like personal help with your financial plan? Schedule a call with us to explore what this can look like for you here.
How do we use purpose to fix our finances?
Purpose has deep implications for our finances. If we don’t have an idea of our purpose, then we might be making “good” financial moves that end up being wrong for us. For instance, we might be contributing to a Roth IRA for tax reasons, but if our goal is to leave money for charity then we’ve paid taxes on money that wouldn’t have to be taxed anyway.
There will be more on taxes and account types later, so don’t worry if you didn’t understand that example, but know that purpose affects our financial decisions so it’s important to address it upfront.
One way I use purpose is as a guide for general spending. If I’m buying something, I’ll often ask myself if the purchase brings me closer to or further from my goal or purpose. If it goes against my purpose, then I should probably reconsider what I’m doing. I wouldn’t go overboard with this, but it is a good way of subduing impulsive behavior.
Another, even more helpful way to use our purpose statement is with retirement planning. I have a client by the name of Steve. Steve and I did retirement planning for many years. He was a diligent saver and prepared well for his and his wife’s future.
One day Steve called me and said, “Okay Paul, I’m ready to retire.” I agreed with him that he was okay to retire, but he had a concern.
“My wife doesn’t think we’re ready.” I was surprised and asked, “Why?”
He said, “Well, she doesn’t know much about our finances and doesn’t know how much I’ve saved into our work retirement accounts.”
You see, Steve had set up an additional savings account many years earlier and had funded it well. His wife was never all that curious about their savings and didn’t even know about it. What I didn’t know was that Steve had a healthy sense of humor. He had a name for the account. It was his “hug me account.”
Steve knew that someday his wife would want to retire, and she would surely hug him when she found out about his retirement planning prowess. (She did.) And it was clear that he had attached value to his savings.
I often have my clients name their accounts in a similar manner. Maybe your 401(k) can become your “family security account” or “adventure account” or whatever else inspires you. Maybe “responsibility” or “not being a burden” is important to you. If so, use those names when referring to your investment accounts.
Another trick for motivation
Finally, before we move deeper into planning with future blogs in this series, let me give you another good trick to motivate yourself to prepare for the future. Realize that the future is coming, and it will be here sooner than you think. While it’s hard to convince ourselves of this, there’s a good tool that can help us make the future more real today—it comes to us courtesy of modern scientific brain research.
One fascinating study used “functional MRIs” to explain why people have such a hard time saving for the future. Using this brain scanning technology, they had the subjects think about themselves in the present and then think about a celebrity. When they compared scans, not surprisingly, they found significant differences. We think of ourselves differently than we think of strangers.
But when they had the subjects imagine themselves in the distant future, and then think about the celebrity, the scans became more similar. We see our future self almost as a stranger. It’s easier to spend money on ourselves today than it is to put money away for someone we don’t know—our future self.
Taking this to the next step, researchers took pictures of the subjects, aged half of them using specialized software, and then gave the participants four choices on what to do with $1,000: they could buy something nice for a special friend, plan a fun event, put it in a checking account, or save it for retirement.
The eye-opening result was that the people who saw the aged version of themselves chose to put twice as much money in the retirement account. Their future self was no longer a stranger.
Want to try a low-tech version of this on yourself? There are apps that can do this. Do a search, try one out, and don’t get too distraught at the image staring back at you. Use it to motivate yourself to prepare for the future so that older person, the future you, isn’t broke!
Money can be a tool to express what you value
I hope some of the ideas in this have given you ways to motivate yourself to create a better future for you and your family.
I have always found great value in making sure that the way I use my money is an accurate reflection of who I am. Too often people only see it as a means of buying material items. While there’s nothing wrong with that, it can interfere with our ability to express what’s really important to us.
We often obtain the things we want only to find that they never satisfy us. Even the richest among us find that there is never enough. When one of the world’s wealthiest men was asked how much money was enough, his answer spoke volumes: “Just a little bit more.”
We can spend our lives trying to look good to our peers and prove that we are worthwhile humans based on our financial accomplishments, but there will always be someone with a nicer house, a better car, a nicer .
If you look at what you really value, my guess is that it has nothing to do with your stuff. It will be a dead-end road if we live our lives trying to make others jealous with our possessions. We have the need for love and connection with others, but the irony is that jealousy is at odds with fulfilling this need.
Once we think deeply about what we value, we can start to see money as a tool to express what we value. As I like to tell my clients, “Money is a great servant, but a terrible master.”
By Paul Winkler
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